Regional Food Reserves

According to Weckstein (1977), storing food in reserves is more of a primitive mind-set, given that the modern transportation revolution have effectively joined most of the grain markets of the world into one. Also, Weckstein points out that most disaster-induced transitory food deficits can be generally off-set by surpluses in other countries. The largest absolute deficit recorded in world food production as of 1977 was in 1972-73, and was only less than 4 percent of world output that year. Weckstein argued that such a small overall deviation in food production can also be countered by a modest decrease in overall consumption. Also, food reserve are rarely efficiently used, as in the case of the 1972-73 disaster when the food prices rose by 400 percent, while a huge stock of grain held in official US reserves remain untouched. Weckstein reasons that food surpluses in grain reserves are not efficiently disposed in the world market because world market is fractured that countries with surpluses view it more advantageous to store their surpluses than to sell them abroad. In essence, Weckstein argues that physical food reserves are inefficient and stiffens the barriers in food trade. As a result, he proposes “an international grain-trade financing institution especially established to facilitate the purchase and sale of grain in relation to abnormal harvests,” which would reduce trade barriers and provide efficient response to disasters.

The grain bank alternative that Weckstein (1977) proposes seems reasonable in theory, but it is largely relies on an assumption that the food deficits it aims to relieve are unexpected transitory. It also assumes that the overall world food production would never face significant absolute deficit, and that food can be easily transported into countries inflicted with disasters when they need it. But there are isolated countries in need who are not easily accessible, and it seems prudent to prepare for a significant global food disaster given the current global warming trend. There have been talks of a internationally owned food reserve, which theoretically should not interfere with global food market in normal times and hence wouldn't solidify food trade barriers. In fact, an International Emergency Food Reserve (IEFR) was proposed to be at the disposal of WFP to improve its capacity to quickly deal with food crisis. However, Shaw (2007) have pointed out many problems with IEFR:

Donors have not fully respected the IEFR modalities that they approved. Contributions have not been fully announced in advance, A high proportion of contributions have been tied and designated to specific commodities and emergencies after they have occurred, eroding the multilateral nature of the reserve, and making it difficult to respond rapidly and flexibly to emergencies whenever and wherever they occur. Contributions to the reserve have fluctuated considerably. And cash contributinos have fallen short of requirements. (p. 161)

Instead of fixing the IEFR, which requires a renewed global effort, perhaps regionalizing such a food reserve is a more viable alternative. An additional benefit of regional food reserves would be that each region could store staple food that are popular and culturally necessary for themselves, such as rice in Asia and potato in South America. As Timmer (1997) points out, stabilizing the price of a popular staple food is an essential element of food security (p. 5). However, localizing food reserves to individual countries and other localities can have the bad side effects that Weckstein (1977) described. A regional food reserve not owned by any specific nation would be more distant from the producers so that they wouldn't make any inefficient production decisions as a result, and would be more conducive to agricultural trade. The East Asia Emergency Rice Reserve (EAERR), a pilot project among the ten ASEAN member states, China, Japan and South Korea, serves as a good example for such a regional food reserve.

(Image from Daño and Peria, 2006, p. 89)

The EAERR reserve was established after acknowledging the failure of the original 1979 ASEAN Emergency Rice Reserve (AERR). As a result, the EAERR identified the following as their new strategies:

To establish a reserve stock both as earmarked and physical stocks stored at various locations either in surplus or deficit countries backed up by strong political will in each country;

To smooth out erratic price fluctuations in the region and increase rice trade in the ASEAN +3 areas;

To improve farmers’ income and welfare (Daño and Peria, 2006, p. 87).

Implementation

Regional food reserves shall be established in:

East and South/Southeast Asia

West Asia and North Africa

Sub-Saharan Africa

South America

Oceania

North America

Europe

Disaster-induced food deficits in each region will be aided primarily by the corresponding regional food reserves.

These reserves consist of both food earmarked by each member nation in respective regions and their voluntary contributions. The food stocks shall be stored at various location in the region to ensure quick response and distribution, both as physical stocks and earmarked surpluses. These reserves will be carefully monitored and administrated by a board of representatives from each nation in the region, so as to ensure that 1) the reserve is only used when a significant short-term food deficit arises in the region that cannot be resolved easily from trade; 2) and that the reserve will be used and replenished without any repurcussion on regional food trades. All nations will have one vote on the board to ensure equal standing of poorer countries in that region.

Each of the regional food reserves will be established and maintained at the expense of nations in respective regions.

The proposal for regional food reserves can be discussed at the next UN assembly as a modification to the existing WFP programs. Each region can then start the construction of the reserve around 2012. The full establishment of the reserves should be complete by 2015.Food reserves appear to be a natural solution for relief of agricultural disasters and stabilization of food prices. Nonetheless, there are many unfavorable side effects with food reserves.